Josh Patrick’s Journey from Struggles to Mastering the Art of Sustainable Business Success -REIA 449

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Hello, enlightened investors. Welcome back to Real Estate Investing Abundance. I'm your host, Dr. Allen. We're so delighted that you're here with us again today. We have with us a returning guest. From our previous podcast, Creekside Chats with Successful Real Estate Investors. And Josh Patrick is a serial entrepreneur. He started working full-time in the business world at the age of 23 with a part-time employee. 20 years later, he sold his company after it had grown to one with 4 branch operations and 90 employees. Since that time, he has been involved in the world of wealth management, as well as helping blue-collar private business owners create businesses that are economically and personally sustainable. He has been a blogger for thenyorktimesinc.com, for forbes.com, and the Huffington Post. He is also the author of Sustainable: A Fable About Creating a Personally and Economically Sustainable Business. business. So glad to have you back with us, Josh. So take us into the show and share a memorable experience that brought you to who you are today.

Oh boy.

Did I catch you off guard on that? I usually, I usually give my, I usually give my guests a warning. Sorry about that.

No, no, it's fine. I can always, uh, go with that. It's the, the question is Which, which experience should I choose?

Well, you've had a lifetime of those, and, uh, and that's, and that's why you have so much wisdom to share with us today.

So, so, um, I guess the thing that, that, um, I often talk about when I start my talks is I talk about my beginning in business, and I tell people, which is really true, is that at 23, the very worst thing that could ever happen to a, a newly minted business owner happened to me. I was really, really, really successful. And the problem with that was, with all that success, I thought it was because I was a boy genius. The truth was I was just lucky. And then, you know what happens after you get a lot of good luck? Often bad luck appears, and if you're not prepared or don't have the knowledge to deal with the bad luck, it can be a really bad experience for you. And the latter was true for me. I mean, not only was I arrogant, but I also didn't know anything. After all, I had a, you know, a degree in American history from Boston University, and that doesn't do a lot to prepare you for business, although I did grow up in a business family, and that helped. But the truth was, I didn't really know what to do, and I had to learn really fast. And that was probably the best thing that could happen to me, is that 2 years into my business career, I had an almost near-death experience with my business, which means I came within a hair's breadth of going bankrupt. And luckily, I was curious. I went to a financial control seminar the National Vending Association put on, and 2 very, very seasoned business owners adopted me and, and, and started mentoring me in what I needed to do. Uh, as a result of that, I learned the value of mentors. And for the folks who are listening, that might be the best thing you can do if you're young in business. Find someone who's over 50 and ask them to help you. They will. If you're over 60, offer to help somebody who's younger. They may not want it, but they certainly need it, and you're going to find people who are happy to accept your advice. So I guess that was probably one of the more important experiences I ever had, although it's like several experiences that went over years.

Well, uh, interesting, and certainly, uh, some good advice there. Uh, I think all of us had to probably throughout our entire life suffer from hubris, thinking that we know more than we do. Well, you had a fortuitous encounter at this conference that you went to. You ran into 2 experienced business people who were willing and able to offer you some mentoring and some coaching. There's a lot of people out there, I think, that are willing to offer a lot of advice, not all of it good. So how did you determine that these particular individuals had the wisdom and knowledge to actually be able to help you through that crisis?

Truth is, I got lucky. And, and this is the challenge that we have. I have this theory And it's kind of a wise guy theory, but I think it's actually got a lot of truth. I believe in every profession, 10% of the people are really, really good. They're world class. 40% of the people are mediocre, and 50% of the people are incompetent. Now, the challenge comes in is how do you know which is which? And, uh, I don't have a really good answer to that. But I do know that with best practices, you are going to hear the same thing come out of the mouth of people pretty much in a similar manner. You know, I had a podcast for 8 years. Uh, we just discontinued it. We had 430 episodes, and I had a lot of experts come on, quote experts come on.

Mm-hmm.

Those who were really good All said about the same thing in their own language. And then there were those who would come up with ideas that didn't make any sense. And anybody with common sense would realize that what they were saying was basically garbage, if not dangerous. So it really comes down to, do you have a good BS sniffer? And if you don't, you better establish— find one, because if you don't, it's going to cost you a lot of money. I mean, for me, the challenge comes in is that people who are mediocre can speak a really good game and learn the jargon and say the right things they need to say, but you need to drill down. And, you know, for example, I've been trying to crack the code with Facebook for years, and I had a guy that was pretty good, but they were just— don't listen, you know. So it really comes down to collaboration. After you've been in business for a while, at least it's my belief, after you've been in business for a while, anybody that you work with as a coach, an advisor, a mentor, a thinking partner, whatever you want to call them, it must be collaborative. You bring specific knowledge about what's important for you. One of the things I like to tell people, say, look, you're the expert at your life. I'm not. My job is to help figure out what you want and then help you find a way to get there that's simple, easy, and you're willing to do.

Well, uh, interesting. In actually developing a BS sniffer, I think that's really crucial, and I think it's really difficult to really develop. I mean, even after, uh, being involved In real estate for a number of years, I was still very susceptible to listening to a lot of the BS and a lot of the hype. It took a long time to really develop that. I actually had to make some big mistakes myself before I started realizing that this sounds really good, but it's really BS. So you had mentioned that The successful people on your show had a consistent message, but they put it into their own words. Can you just, in a few sentences or a paragraph or two, what are those consistent things that you hear time and time again from, from the real gurus?

Well, I just want to go back to— there is a way to find out if somebody knows what they're talking about. Or at least this is a good clue, and then I'll answer your question— is that the more jargon somebody uses when they speak with you, that probably means they don't know what they're talking about. People who are very clear— and this is a good answer— people who are really clear use plain English. And if they do use jargon, they immediately explain what is the definition of that jargon. So that's a good start with that. The people who are consistently have been really stars at what they do, they know about the value of values. They talk about values. They will help you understand that starting with a values-led company will always give you a better result than companies that are not values-led. And those who are really, really good will tell you that if a small business Your company's values should be pretty similar to your personal values. So start with figuring out what your personal values are and then go from there. They will tell you that to build a big business, you have to manage the fine art of delegation. You have to become a delegating ninja, which means that you're going to make a lot of mistakes along the way. And you need to learn to trust the people on your team, and you need to have a methodology for handling mistakes in a positive manner, not a negative manner. It means that you have to focus on simplification in your business. Don't make it complicated. Business is arithmetic, it's not math. In other words, if you can add, subtract, multiply, and divide, you can be a very successful business owner. There is no business analysis that requires more than that. Now, MBAs will tell you you require more than that, but the truth is, the more complicated you make your formulas, the more obtuse they become and the harder they are to understand. So those are just a few things that you might want to be thinking about.

Yeah, good things to think about. Values, both business and really consolidate— I mean, really combining business and personal values. make a really good foundation for a business. And I think you're right, gurus don't often start there. They want to start at the top. Everybody wants to be on the top of the elevator, and nobody wants to start at the bottom. Delegate and trust and methodologies for correcting mistakes all make sense to me. So what What is the hardest skill a business owner ever has to learn?

That's easy. Delegation.

Delegate. Okay.

So, so, I mean, there's, there's, there's about 8 million businesses in the United States that have employees. 85% of them have less than 20 employees. You don't need to be a good delegator when you have less than 20 employees. You, you'll have a couple of helpers. You'll tell what people to do. You look over their shoulder every step of the way. I mean, those are the sort of things you see in small companies all the time. Companies that grow past that, the owner has learned how to delegate and not just delegate jobs to the people doing it. That's a helper thing. Real delegation is when you delegate to people who are managing others and you help them get successful results. And that is an incredibly hard skill to learn. Most people give up. They try it. They say it doesn't work. You know, when I talk to you about delegation, they say, so you need to delegate if you want to grow your business. They'll say, I've tried it before and it didn't work. So we have a very simple formula for delegation that, that is a 2-part step. And I learned this from one of those first mentors that I talked about at the beginning of our conversation. And it's called EIA, which stands for expect Inspect, accept. First you set an expectation, then you inspect to make sure you get it, and then you accept it after it's done. But what happens when you go to inspect and it's not done right, which is going to happen about the first 100 times you try to delegate something? So then you have to go back to inspect and adopt. Inspect and adopt means when you inspect and it's not up to your your standards. Don't blame and yell at the person that didn't do it right. Look in the mirror and say, what do we need to adopt in our delegation methodology that will get us a better result? If you do those things, you're going to become a pretty good delegator. And you have to be willing to be wrong more than you're right to start. And that's true, by the way, for almost everything we do. I mean, You know, everyone uses this example all the time, and it happens to be a good one. When you learn to ride a bike, did you give up after the first time you fell off? Or the second time? Or the third time? Or the fourth time? No, you kept doing it till you learned how to ride the bike. Well, as adults, we seem to have forgotten that, and we give up way too fast.

Enlightened Investors, if you haven't done so already, be sure and click that like button and also click that share so others can take advantage of the content. And finally, be sure to subscribe so you don't miss a single one of our upcoming episodes. So, uh, EIA— expect, inspect, and, uh, accept, accept, and accept and adapt. Well, that, that It sounds like an excellent process. You say that we fail more than we succeed, particularly when we're starting out. How do we mitigate against the loss? Because mistakes in business can be devastating financially. So how do we, when we're starting out, how do we mitigate against that?

Well, I would probably push back against that. there are things you can do which will be devastating to your business. There are things that happen in your business that are devastating, which you had nothing to do with, but you have to deal with. I mean, I had a, you know, an embezzlement from my controller. It was $200,000.

Hmm.

And that was after I had overextended my company with buying vending machines because we grew way too fast. We went from $75,000 in sales to $1.4 million in sales in 4 years.

Wow.

And we were really overextended with that. And then on top of that, I had an embezzlement. So none of that was my fault, but I had to really pivot very quickly to doing stuff that people said you can't do. And there's— and the rule in business is, and this is something people don't know, is there basically are no rules in the business. There are best practices, there's things you should do, But there's nothing you have to do. Although there is one thing you have to do. You have to have positive cash flow because without that you go out of business. It's one of my problems with the unicorn companies in Silicon Valley is that all the VCs, they don't really care if you make money. They don't care if you go out of business even. They're just looking for that 1%, 2% that become huge and they get a huge payday on. And the 97% of those that fail, they say, okay, that's part of the cost of playing. That's a crappy way to run a business, in my opinion. You know, one of my favorite authors is a guy named Mike Michalowicz, and Mike's first book was a book called Profit First. It's a book that basically says focus on your profit first, put away your profit before you pay any other expenses. It's sort of like the old envelope system that people used in the Depression to pay their bills, but it's for business. And I actually think this— I said, you know, Focus on profits. You know, one of the things that just drives me out of my mind is the gurus out there saying we're going to 10x your sales. If I 10x your sales, there's a pretty good chance they're going to 10x you into bankruptcy. Instead, why don't we focus on doubling your profits and then doubling your profits again? I will promise you that it's way easier to double your profits than double your sales, much less 10 extra sales because there's lots of moving parts for that. For most businesses that make between $100,000 and $200,000 a year, I can help you double your profits in 90 days. It's that easy. When you get up to $1 million in profits, well, I'm not gonna double your profits in 90 days, but I probably can increase it by 20% in 90 days. And again, it's really pretty easy and simple stuff. I mean, for example, have you tested pricing elasticity? Most business owners, they don't want to hear the word no when something— they make a proposal, so they depress their prices. If you're not hearing no 10 to 20% of the time you put a proposal out, there's a pretty good chance you're too cheap.

Hmm.

So let's say I have a business doing $1 million a year and I'm making $100,000. Not a bad, not bad thing, 10% profit. What if I raise my prices by 20%? I lost 10% of my business. Where would I be then? I've got $1.2 million. I lose 10%. That's $120,000. I now have $1,080,000. And instead of making $100,000, I'm now making $180,000. And by just doing that one little thing, I've come pretty close to doubling my profits.

Well, we are talking with Josh Patrick, uh, today. You can find Josh at sustainablebusiness.com and with the forward slash of freedom. So Josh, tell us about what it is you do.

Excuse me, it's actually .co. SustainableBusiness.co/freedom will give you information about our program we have called our Financial Freedom Accelerator.

And tell us a little bit about your program.

Essentially, this is the what you need to do program, and it's— we start off with finding out where you are financially on the road to financial independence from your business. If you need help, which most business owners do, we go to phase 2 where we work with you strategically to say, what are the strategic activities that will give you the biggest result for the least amount of effort over the next 90 days? And we help you define what that is and why it's important for you to do that. And that's the program. It's really pretty simple. Again, most of the stuff we do is very simple. If you look at it and say, Boy, you're charging a lot of money for something that's pretty simple. Well, if you can double your profits in 90 days, what's that worth to you? You know, we charge $4,970 for that program, and if you're making $100,000 and you go to $200,000, would you be willing to give me $5,000 for that, even though it won't take you much time to— for us to figure out what you need to do?

Sounds like a good deal to me. Uh, so once again, that's sustainablebusiness.co/freedom. So Josh, what do you mean when you say stop marketing and start selling?

Well, this is something which I just really— it's been driving me crazy recently, is that everybody likes to market. Marketing is fun. Marketing is about creating awareness. Sales, on the other hand, is about creating customers. There are a ton of business— I mean, I, I talk— I'm working with 2 businesses right now. They both have huge lists. They both have people who are interested in them, and they expect these people who find them to put their hand up and say, I want to buy from you. Now, their programs are expensive. One of the programs is $4,000 and the other is $23,000. Nobody is going to put their hand up and offer. When I say nobody, I mean like 98% of the people are not going to offer. You need to get on the phone, call them, put outreach to them, and make a deal. Now, there's a company out there called HubSpot, which you may or may not have heard of. HubSpot is a company that basically invented inbound marketing. Now, if you contact HubSpot, you go on their website, you download anything from them— they have a ton of really good information about inbound marketing on their website— but before you get any of that information, you have to fill out a relatively long form. And within 10 minutes of you downloading whatever it is you download, a salesperson from HubSpot is going to call you They grew their business on outbound sales, not inbound marketing. And it's a huge myth that— so you have to realize, if you need awareness and nobody knows who you are, you need to do marketing. But if enough people know who you are, you need to pivot to sales and focus on sales. When you send a proposal— I had a client who was in the rebuilding business for box manufacturing machines. He rebuilt the machines, huge machines. I asked him, I said, what's your closing ratio? He said, 10%. And I said to myself, well, there's something wrong with that. So then I asked him, I said, okay, what do you do with your sales when you send a proposal out? And he looked at me and said, well, we don't do anything. We wait for them to call us. I said, how would you like to double your sales tomorrow? He said, okay. So here's what you do. You send out a proposal. 3 days later, you call them to ask them if they have any questions. If they say no and they haven't responded in 2 weeks, call them again and say, gee, is there anything I can do to help you move forward with this project? And if they don't call you again in a month, you call them again. You keep doing that until they either tell you to go away Or they say, let's get started. And I will promise you, 20, 30, 40, maybe 50% of the people, if you're consistent, will move from not responding to actually taking action because you're helping them to do so. You're helping them find the reasons they need to do it, which means you need to know what the reasons are in the first place. You know, one of my favorite sales books is a book called The Challenger Sale. And in there, what they do, they say, you know, the best salespeople are not the nicest people in the world. They don't build the best rapport. But what they do do is they challenge you to think differently about a problem that you have, and then they have a solution for that problem. Now, there's a, there's a key in there, which is I've asked people a zillion times. I ask every business owner almost I run into, I said, what's the problem you solve? What do you think the percent of people who can answer that question is?

Um, 10%.

You got it. It's about 10%. 90% of people will tell you what they do. They don't tell you what the problem you solve is. For example, the problem I solve for people is if you don't have enough cash in your business and life, you need to be talking to me. So the problem is Lack of cash. That doesn't talk about any way I do go about helping you solve that. It just tells you, do you have this problem? And if you have this problem, I'm going to help you think differently about it, and we're going to come up with solutions for it. That's what the Financial Freedom Accelerator is all about. It's what all our programs are about. If you're making plenty of dough and you don't have a cash problem or a cash issue, or you want more cash, Don't talk to me. But if you do, you need to talk to me.

So we are talking with, uh, Josh Patrick, and you can find Josh at sustainablebusiness.co/freedom. Josh, tell us about one of the major setbacks— you've shared some of them— another major setback that you had to come through to get to where you are today. And that could be personal, Or it could be business.

I'll tell you a business and a personal. How's that?

That's good.

Yeah. A business was when I had my food service company. I had a commissary manager. The commissary is where he made all our sandwiches and entrees for our vending machines and cafeterias. And he wanted to save me some money, but he never told me about it. So he switched our formula from anything used ground beef the ground turkey. Now, if you know anything about ground turkey, there's a high probability it has salmonella in it. And if you don't handle it properly, you're going to have a salmonella breakout. We had that.

Hmm.

Luckily, we had done scenario planning about the 5 or 6 things that would put us out of business, and salmonella was one of them. And as a result, we had about 20 people get sick. On the food we had. For most, most food companies, that'll put you out of business. Because we knew exactly what we're gonna do and how we're gonna do it and who we needed to help, I was able to hold off the media, and they were all over us for this. And we were able to go to everybody, and the first thing we said is, whatever this is, it's our problem. We are gonna help you take advantage of it and make sure it gets solved properly. Now, because we did everything right, or almost everything right, we didn't lose any accounts over that. We kept every account we had. We only got sued by one person out of the 20. The other 19 we settled with very easily. They were reasonable because we were reasonable and didn't try to blame other people for what went wrong. We took responsibility, and we— and which is one of our core values— and we said it's our fault, we'll help get— solve this. So that was, that was a— the worst 2 weeks I ever spent my entire business career. The personal thing was when I was 55 years old, I was in the wealth management business. I came down with a life-threatening form of cancer. And again, I decided it would be better to be, uh, transparent about what was going on And not try to keep it under wraps. In fact, I was so transparent about it, I made an entry in a program called CaringBridge, which is for people who have health issues, every single day for 3 years. Some of those days it would take me 4 hours to write 400 words. Other days it would take nothing. It was a very serious— we had a stem cell transplant. I had tons of problems. Again, I didn't lose any clients. My business took some really serious steps back, but my personal business stayed intact because I was transparent and I was able to do enough— not what I would normally do, but enough to keep everybody satisfied who were clients at that time.

Lots of wisdom, uh, Josh, and that's why I love having you on my show here. So this is Josh Patrick. You can reach Josh at sustainablebusiness.co/joshpatrick. Freedom. Thank you, Josh, for being with us today. Enlightened Investors, thank you so much for taking your time to be with us today. It's always a privilege having you with us. If you can, please take a moment to like, share, and subscribe, and go to your favorite podcast app and leave us a rating and review. Until next time, live abundantly, and we'll see you in the next episode. Enlightened Investors, wait, wait, don't go just yet. I just want to remind you about our recently launched webinar that you If you're at all curious and would like to learn more about how real estate investing can diversify your investment portfolio, alleviate the anxiety associated with Wall Street swings, leverage your 401s and IRAs to substantially increase the return on your investment, and do all of this with turnkey, hands-off, passive real estate investments, then you'll want to immediately go to—

AllenLomax.com.

stevetalker.com/webinar. In the webinar, we'll also address the common dubious investment schemes that you want to avoid. To access the webinar, go to stevetalker.com/webinar. I look forward to seeing you in the webinar.

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